27:
936:... recall Keynes's argument that the marginal propensity to consume should be between zero and one, or his discussion about whether the marginal efficiency of investment should be sensitive to current output or should depend primarily on "the state of long-term expectations." Those are microfoundations.
956:
The marginal propensity to consume is not constant for all levels of employment, and it is probable that there will be, as a rule, a tendency for it to diminish as employment increases; when real income increases, that is to say, the community will wish to consume a gradually diminishing proportion
885:
There are not many people who will alter their way of living because the rate of interest has fallen from 5 to 4 per cent, if their aggregate income is the same as before... the short-period influence of the rate of interest on individual spending out of a given income is secondary and relatively
523:
Some new theoretical works following
Duesenberry's and based in behavioral economics suggest that a number of behavioural principles can be taken as microeconomic foundations for a behaviorally-based aggregate consumption function.
30:
Graphical representation of the consumption function, where a is autonomous consumption (affected by interest rates, consumer expectations, etc.), b is the marginal propensity to consume and Yd is disposable
324:
People typically spend a part, but not all of their income on consumption, and they save the rest. They typically do not borrow money to spend, or borrow money to save. This fact is modelled by requiring
662:
498:
287:
500:. If this assumption is to be used, it would result in a nonlinear consumption function with a diminishing slope. Further theories on the shape of the consumption function include
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Keynes also took note of the tendency for the marginal propensity to consume to decrease as income increases, i.e.
245:
434:
By basing his model in how typical households decide how much to save and spend, Keynes was informally using a
239:
154:
that is independent of disposable income; in other words, consumption when disposable income is zero. The term
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517:
369:
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1201:
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85:
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699:—income after government intervention, such as taxes or transfer payments—into levels of consumption
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242:, i.e. the increase in consumption due to an incremental increase in disposable income, since
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People with higher income save a higher proportion of the income. This is modelled by
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An essay examining the strengths and weaknesses of Keynes's theory of consumption
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52:
846:
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729:
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People, when deciding how much to save, are insensitive to the interest rate.
317:
886:
unimportant, except, perhaps, where unusually large changes are in question.
899:
826:
915:
1354:
26:
1248:
36:
736:(Third ed.). New York: John Wiley & Sons. pp. 40–43.
831:(11 ed.). New York. 20-1 What Determines Consumer Spending?.
1003:"Behavioral foundations for the Keynesian consumption function"
1105:
310:
657:{\displaystyle f\colon \mathbb {R} ^{+}\to \mathbb {R} ^{+}}
16:
Economic model relating consumption and disposable income
900:"Introduction: The Tobin Approach to Monetary Economics"
51:. The concept is believed to have been introduced into
883:. New York: Harcourt Brace Jovanovich. Section 3.8.2.
493:{\displaystyle \partial ^{2}C/\partial Y_{d}^{2}<0}
705:
678:
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372:
331:
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951:
The
General Theory of Employment, Interest and Money
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The
General Theory of Employment, Interest and Money
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972:Income, Saving and the Theory of Consumer Behavior
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711:
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656:
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419:
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355:
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281:
230:
210:
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142:
119:
191:that is influenced by the economy's income level
1461:
1060:(Undergraduate level discussion of the subject.)
59:in 1936, who used it to develop the notion of a
766:Macroeconomics: Theory, Performance, and Policy
1076:. New York: Academic Press. pp. 298–323.
1264:
1121:
800:. Glenview: Scott, Foresman and Co. pp.
1047:. Hinsdale: Dryden Press. pp. 113–141.
504:'s (1949) relative consumption expenditure,
1089:(Graduate level discussion of the subject.)
968:
282:{\displaystyle \partial C/\partial Y_{d}=b}
1271:
1257:
1128:
1114:
1038:
859:: CS1 maint: location missing publisher (
768:. New York: W. W. Norton. pp. 63–67.
756:
438:approach to the macroeconomics of saving.
644:
629:
985:
788:
728:
316:Keynes proposed this model to fit three
25:
1064:
954:. New York: Harcourt Brace Jovanovich.
1462:
1278:
1001:d’Orlando, F.; Sanfilippo, E. (2010).
947:
876:
824:
549:Measures of national income and output
1252:
1109:
904:Journal of Money, Credit, and Banking
897:
988:A Theory of the Consumption Function
872:
870:
13:
1032:
764:(1986). "Consumption and Income".
466:
449:
393:{\displaystyle {\frac {C}{Y_{d}}}}
260:
249:
14:
1481:
1094:
867:
796:Macroeconomics: Theory and Policy
43:describes a relationship between
1238:List of largest consumer markets
1217:Random walk model of consumption
120:{\displaystyle C=a+b\cdot Y_{d}}
1135:
994:
979:
1010:Journal of Economic Psychology
962:
941:
891:
818:
782:
750:
722:
639:
601:
588:
566:
508:and Richard Brumberg's (1954)
350:
338:
313:of the consumption function.
240:marginal propensity to consume
61:government spending multiplier
1:
1156:Final consumption expenditure
1470:Consumption (macroeconomics)
1039:Poindexter, J. Carl (1976).
672:levels of disposable income
180:{\displaystyle b\cdot Y_{d}}
7:
1212:Permanent income hypothesis
969:Duesenberry, J. S. (1949).
825:Mankiw, N. Gregory (2022).
554:Permanent income hypothesis
527:
518:permanent income hypothesis
73:linear consumption function
10:
1486:
1222:Relative income hypothesis
1202:Absolute income hypothesis
1070:"The Consumption Function"
1041:"The Consumption Function"
1022:10.1016/j.joep.2010.09.004
607:{\displaystyle C=f(Y_{d})}
572:Algebraically, this means
539:Absolute income hypothesis
356:{\displaystyle b\in (0,1)}
75:used frequently in simple
66:
18:
1421:
1368:
1332:
1286:
1230:
1194:
1166:Intertemporal consumption
1143:
898:Solow, Robert M. (2004).
71:Its simplest form is the
948:Keynes, John M. (1936).
877:Keynes, John M. (1936).
559:
19:Not to be confused with
1429:Consumers' co-operative
1309:Consumer culture theory
1186:Conspicuous consumption
1391:Consumer socialization
1386:Consumer ethnocentrism
1299:Autonomous consumption
1176:Autonomous consumption
1171:Random walk hypothesis
713:
693:
658:
608:
494:
421:
394:
357:
303:
283:
232:
212:
181:
152:autonomous consumption
144:
121:
32:
1350:Consumer neuroscience
1207:Life-cycle hypothesis
1161:Instant gratification
986:Friedman, M. (1957).
916:10.1353/mcb.2004.0067
714:
694:
692:{\displaystyle Y_{d}}
659:
609:
544:Life cycle hypothesis
510:life-cycle hypothesis
495:
422:
420:{\displaystyle Y_{d}}
395:
358:
304:
284:
233:
213:
211:{\displaystyle Y_{d}}
182:
145:
122:
29:
1434:Consumer-to-business
1401:Consumption function
1151:Consumption function
1074:Macroeconomic Theory
703:
676:
618:
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445:
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329:
293:
246:
222:
195:
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134:
86:
41:consumption function
1439:Factory-to-consumer
1376:Consumer confidence
1369:Consumer attributes
1304:Induced consumption
1181:Induced consumption
483:
189:induced consumption
57:John Maynard Keynes
1381:Consumer confusion
1360:Marketing research
1345:Consumer economics
1280:Consumer behaviour
1066:Sargent, Thomas J.
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208:
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140:
117:
33:
1457:
1456:
1406:Cultural consumer
1324:Consumer spending
1246:
1245:
838:978-1-319-26390-4
712:{\displaystyle C}
506:Franco Modigliani
502:James Duesenberry
388:
302:{\displaystyle b}
289:. Geometrically,
231:{\displaystyle b}
143:{\displaystyle a}
49:disposable income
1477:
1444:Consumer service
1355:Consumer product
1319:Consumer economy
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534:Aggregate demand
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218:. The parameter
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77:Keynesian models
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1449:Consumerization
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1412:Homo economicus
1396:Consumer's risk
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1340:Consumer choice
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1033:Further reading
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762:Taylor, John B.
758:Hall, Robert E.
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514:Milton Friedman
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436:microfoundation
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1294:Consumption
1137:Consumption
1016:(6): 1035.
45:consumption
847:1289514240
516:'s (1957)
1422:Processes
932:154008365
924:1538-4616
855:cite book
640:→
625::
467:∂
450:∂
336:∈
261:∂
250:∂
165:⋅
105:⋅
37:economics
1464:Category
1287:Concepts
1195:Theories
1068:(1979).
792:(1986).
732:(1976).
666:function
528:See also
309:is the
187:is the
150:is the
67:Details
1144:Topics
1080:
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957:of it.
930:
922:
845:
835:
808:
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614:where
512:, and
130:where
39:, the
31:income
1231:Lists
1006:(PDF)
928:S2CID
804:–97.
668:that
664:is a
560:Notes
311:slope
1078:ISBN
1049:ISBN
920:ISSN
861:link
843:OCLC
833:ISBN
806:ISBN
770:ISBN
738:ISBN
670:maps
485:<
47:and
1018:doi
912:doi
55:by
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